The weekly Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures traders and currency speculators cut back sharply on their bullish bets of the US dollar last week. Large traders had boosted long positions the previous three weeks.
Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, dropped their overall US dollar long positions to a total of $10.80 billion as of Tuesday September 17th. This was a decrease of $11.21 billion from the total long position of $22.01 billion that was registered on September 10th, according to data from Reuters that calculates this amount by the total of US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.
US dollar overall long positions are now at their lowest level since February 19th when long bets were at a total of just $1.481 billion and the weekly decrease of $11.21 billion was the largest decline since the week of June 18th when positions fell by $13.73 billion.
COT explanation: The weekly cot report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and non-reportable traders (usually small traders/speculators).
Comments: Large Traders cut back on US dollar contracts just before the Fed Tapering announcement
Interestingly, this latest COT data is from one day before the US Federal Reserve’s decision on whether to scale back or “taper” the QE3 stimulus program. It was widely expected that the Fed would taper at least slightly (although the Fed refrained) and the event was thought to be a likely case for a stronger US dollar.
The large trader data, however, suggests that these traders were betting either the Fed would not taper or that, perhaps, the tapering was already priced into the market and therefore a way to trade against the obvious strong dollar idea.
Either way, it is interesting that the largest weekly decrease in USD bullish positions since June happened a day before the Fed announcement.
Individual Currencies Large Speculators Positions in Futures:
The large non-commercial net positions for each of the individual major currencies directly against the US dollar last week saw weekly increases for the euro, British pound sterling, Japanese yen, Swiss franc, Canadian dollar, Australian dollar and the New Zealand dollar while just the Mexican peso had a declining number of large speculator positions for the week.
Individual Currency Charts:
EuroFX:
Last Six Weeks of Large Trader Positions: EuroFX
| Date | Large Trader Net Positions | Weekly Change |
| 08/13/2013 | 16057 | 9996 |
| 08/20/2013 | 36746 | 20689 |
| 08/27/2013 | 40081 | 3335 |
| 09/03/2013 | 22738 | -17343 |
| 09/10/2013 | 12696 | -10042 |
| 09/17/2013 | 31907 | 19211 |
British Pound Sterling:
Last Six Weeks of Large Trader Positions: Pound Sterling
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | -46521 | -488 |
| 08/20/2013 | -39522 | 6999 |
| 08/27/2013 | -38226 | 1296 |
| 09/03/2013 | -43046 | -4820 |
| 09/10/2013 | -38166 | 4880 |
| 09/17/2013 | -6310 | 31856 |
Japanese Yen:
Last Six Weeks of Large Trader Positions: Yen
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | -74462 | 5751 |
| 08/20/2013 | -71721 | 2741 |
| 08/27/2013 | -78353 | -6632 |
| 09/03/2013 | -79761 | -1408 |
| 09/10/2013 | -95066 | -15305 |
| 09/17/2013 | -88794 | 6272 |
Swiss Franc:
Last Six Weeks of Large Trader Positions: Franc
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | 2136 | 2461 |
| 08/20/2013 | 291 | -1845 |
| 08/27/2013 | 402 | 111 |
| 09/03/2013 | 1059 | 657 |
| 09/10/2013 | 420 | -639 |
| 09/17/2013 | 616 | 196 |
Canadian Dollar:
Last Six Weeks of Large Trader Positions: CAD
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | -9081 | 1355 |
| 08/20/2013 | -9544 | -463 |
| 08/27/2013 | -24959 | -15415 |
| 09/03/2013 | -34639 | -9680 |
| 09/10/2013 | -30942 | 3697 |
| 09/17/2013 | -18764 | 12178 |
Australian Dollar:
Last Six Weeks of Large Trader Positions: AUD
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | -62721 | 14058 |
| 08/20/2013 | -63183 | -462 |
| 08/27/2013 | -71117 | -7934 |
| 09/03/2013 | -71506 | -389 |
| 09/10/2013 | -60032 | 11474 |
| 09/17/2013 | -27360 | 32672 |
New Zealand Dollar:
Last Six Weeks of Large Trader Positions: NZD
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | 197 | 1736 |
| 08/20/2013 | 2390 | 2193 |
| 08/27/2013 | 252 | -2138 |
| 09/03/2013 | -797 | -1049 |
| 09/10/2013 | -601 | 196 |
| 09/17/2013 | 5657 | 6258 |
Mexican Peso:
Last Six Weeks of Large Trader Positions: MXN
| Date | Lg Trader Net | Weekly Change |
| 08/13/2013 | 36320 | 4195 |
| 08/20/2013 | 36131 | -189 |
| 08/27/2013 | 7198 | -28933 |
| 09/03/2013 | 688 | -6510 |
| 09/10/2013 | 8279 | 7591 |
| 09/17/2013 | -10201 | -18480 |
The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).
Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.
(The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.)
See more information and explanation on the weekly COT report from the CFTC website.
Article by CountingPips.com
